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November 2013 Archive for Market Watch

RSS By: Alan Brugler, AgWeb.com

Alan Brugler is the President of Brugler Marketing & Management, and the primary analyst and advisor.

Running Out of Soybeans?

Nov 29, 2013

 Brugler

Market Watch with Alan Brugler

November 29, 2013

Running Out of Soybeans?

 

At the current export sales pace, the US crushers will not be able to obtain the projected quantity of soybeans unless USDA finds larger production to report in the January Crop Production report. Of course there are also rumors that China is canceling or re-selling some of its extensive purchases, but they (presumably different firms) also continue to buy. Using the November WASDE estimates, the US only had an extra 50 million bushels to export before reaching pipeline supply levels. We should not be too hasty in reaching a full bull market conclusion. There is another possible outcome, hinted at in 2013. US origin beans can be heavily sold in the first half, with imports from South America as needed in the second half to fill in the hole. It might not be the most fuel efficient solution when looked at from a global perspective, and it doesn’t work well for crushers in the interior, but it has been done before.

 

December corn futures lost 7 cents for the week. Demand is a bright spot as low prices continue to work to cure low prices. Ethanol stocks dropped to the lowest reading since reporting began in 2010. Imports have been zero for the past 7 weeks, as US prices have been cheaper than those in Brazil. That has the industry optimistic about export potential. DDG exports have already been very strong. USDA reported strong corn weekly export sales of 1.01 MMT for the week ending November 21. Export commitments are already 71% of the newly revised USDA forecast for the year, hinting at another upward export revision in the future. The 5 year average commitment for this time would be 49%.

 

Soybean futures gained 1.3% this week to add to the 3% advance from the prior week. Weekly US export sales were a much larger than expected 1.77 MMT. China continues to aggressively buy US beans for 1Q14 delivery. A cancelation/switch announced this week won’t show up in the weekly totals until next week, but is just a shift from China to unknown.  Total US export Commitments as a % of total exports are now at 93%, which compares to 76% last year.  Profit margins for end users continue to provide a positive influence.  Soybean meal export sales continue to be very strong (and front loaded) with 55% of the projected sales for the year already booked. The average pace would be 38%.

 

Wheat futures were higher in Chicago and KC but MPLS continued to leak lower due to competition from cheaper Canadian wheat. Total US export commitments are still a larger % of the USDA forecast than usual for this date, currently at 75% vs. the five year average of 68%.  Weekly sales through November 14 totaled 562,200 MT.  

Cotton futures rallied a sharp 3.9% this week in the soon to expire December contract. The market worked through a few days of heavy deliveries, and now the remaining shorts appear to want out. Global ending stocks are still projected to be record large at 95.71 million bales. Weekly export sales for the week ending November 21 totaled 265,700 running bales of Upland Cotton for 2013/14 as well as another 30,400 running bales for 2014/15 delivery to El Salvador.  Pima sales were reported at 10,700 running bales. Commitments as a % of total exports (for upland cotton) are now at 63%, which compares to 60% for this point last year, and lagging the 5 year average of 68%.    

 

Commodity

 

 

 

 

Weekly

Weekly

Month

11/08/13

11/15/13

11/22/13

11/29/13

Change

% Change

Dec

Corn

$4.27

$4.22

$4.22

$4.15

($0.07)

-1.66%

Dec

CBOT Wheat

$6.50

$6.45

$6.50

$6.55

$0.05

0.85%

Dec

KCBT Wheat

$7.085

$6.983

$7.018

$7.13

$0.12

1.64%

Dec

MGEX Wheat

$7.12

$6.97

$6.99

$6.86

($0.13)

-1.86%

Jan

Soybeans

$12.96

$12.81

$13.20

$13.37

$0.17

1.29%

Dec

Soybean Meal

$422.30

$410.50

$427.80

$456.60

$28.80

6.73%

Dec

Soybean Oil

$40.24

$40.47

$41.16

$40.22

($0.94)

-2.28%

Dec

Live Cattle

$132.40

$133.40

$131.48

$133.48

$2.00

1.52%

Jan

Feeder Cattle

$164.43

$165.82

$163.50

$165.48

$1.97

1.21%

Dec

Lean Hogs

$88.13

$85.90

$85.63

$85.68

$0.05

0.06%

Dec

Cotton

$76.90

$77.12

$75.21

$78.14

$2.93

3.90%

Dec

Oats

$3.35

$3.43

$3.69

$3.65

($0.04)

-1.02%

Nov

Rice

$15.85

$15.77

$15.72

$15.96

$0.25

1.56%

 

Cattle futures rallied $2.00 this week, mimicking the $1-2 gains in cash cattle. Feeders were up $1.97 or 1.2%. Weekly slaughter was down 10.5% from last week due to the Thanksgiving holiday. Year to date beef production is down 1.2%.  Wholesale beef prices were down 1.96% on a Fri/Fri basis in the Choice, and down 1.11% in the Select. USDA reported weekly beef export sales of 9,500 MT.

 

Hog futures were up 0.06% for the week, i.e. a nickel. Pork production YTD is down 1.0% from year ago. Pork production this week was 11.5% smaller than last week because of the Thanksgiving holiday. Estimated week to date slaughter (including Saturday estimates) came in at 2.068 million head.  Year to date slaughter through 11 months is down 1.5%, with higher carcass weights offsetting some of the lost head count. The pork carcass cutout value was down $2.29/cwt this week, a 2.94% drop largely due to a 6.94% down-week for bellies.  USDA reported weekly pork export sales were a routine 8,700 MT. The poultry industry continues to expand, with egg sets and chick placements up 2% vs. the same week in 2012.

 

 Market Watch

We turn the calendar to December, and the year end portfolio adjustments by the funds start to kick in. The formal report lineup is fairly thin for the week. We’ll have USDA export inspections on Monday. Weekly Export sales will be on Thursday morning. Friday will mark the expiration of the December cattle options. Friday will also be the last trading day for December cotton futures.

 

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.                  Copyright 2013 Brugler Marketing & Management, LLC

Market Watch with Alan Brugler Roasting Turkeys

Nov 22, 2013

Brugler 

Market Watch with Alan Brugler

November 22, 2013

Roasting Turkeys

 

The week started off fairly quiet for the grains.  It seemed as if the looming Thanksgiving Holiday weekend was permeating the grain market.  The traditional after-dinner nap hit the markets before the turkeys were even put into the oven!  Perhaps the markets were more like the turkey itself; slowly roasting in the oven.  Everybody knows it is there, people keep checking on it; rotating it, and turning it around every so often, but overall it really is not doing much.  When the export sales report came out on Thursday morning, the soybean market woke up and had two strong up-days in a row.  Like the smitten grin on a hungry family member who snitched an early nibble of the bird, the soybean market brought some holiday life to the grains.  This image of turkeys roasting was hard on the meats this week.  Both live cattle and feeders took a solid hit to start the week, and did not fully recover.  Lean hogs also had a losing week. 

 

December corn futures eked out a gain of less than one penny for the week, and held above the 7 year uptrend support line at $4.19 on the weekly and monthly continuation charts. Demand is a bright spot. Ethanol stocks dropped to the lowest reading since reporting began in 2010. Imports have been zero for the past 7 weeks, as US prices have been about 25 cents per gallon cheaper than those in Brazil. USDA reported good weekly export sales of 982,700 MT. Export commitments are already 68.5% of the newly revised USDA forecast for the year, hinting at another upward revision in the future. The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 which showed managed money spec funds increased their net short position in corn by 7,026 contracts, bringing their total net short position to 146,086 contracts.

 

Soybean futures gained an impressive 3.05% this week, adding more than 45 cents per bushel between the Wednesday and Friday closes. Weekly US export sales were a strong 1.376 MMT, with China buying 83% of them.  Total US export Commitments as a % of total exports are now at 89.89%, which compares to 74% for last year and the 5 year average for this week which is 65%.  Strong profit margins for end users continue to provide a positive influence.  December soybean meal gained 4.21% on the week, closing the week $17.30 higher.  The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 showed managed money spec funds increased their net long position in soybeans by 8,502 contracts, bringing their total net long position to 129,393 contracts.   

 

Wheat futures were higher this week in all three classes.  CBOT wheat gained a nickel, KC wheat was almost as strong with a 4 cent move, and then MPLS wheat added two pennies. Not the most convincing way to stop a losing streak, but it was the first positive week for all three classes together in over a month. The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 showed managed money increased their net short position in CBOT wheat by 7,948 contracts bringing their total net short position to 55,199 contracts.  Total US export commitments are still a larger % of the USDA forecast than usual for this date, currently at 73% vs. the five year average of 66%.  Weekly sales through November 14 totaled 618,100 MT, up from less than 300,000 the prior week.  

Cotton futures lost 2.48% this week and on Thursday the December 2013 contract posted its lowest daily close since early November of 2012. Global ending stocks are still projected to be record large at 95.71 million bales. The Commitment of Traders data for the reporting period between Nov Nov 12 – Nov 19 showed managed money decreased their net long position in cotton by 916 contracts bringing their total net long position to only 4,968 contracts. Weekly export sales for the week ending November 14 totaled 318,300 RB of Upland, with 13,200 MT of the total for delivery in the 2014/15 marketing year.  Net Pima sales were reported at 26,200 RB, all of which was for 2013/14 delivery. Total Commitments as a % of total exports (for upland cotton) are now at 60%, which compares to 57% for this point last year, and lagging the 5 year average of 66%.    

 

Commodity

 

 

 

 

Weekly

Weekly

Month

11/01/13

11/08/13

11/15/13

11/22/13

Change

% Change

Dec

Corn

$4.27

$4.27

$4.22

$4.22

$0.00

0.06%

Dec

CBOT Wheat

$6.68

$6.50

$6.45

$6.50

$0.05

0.78%

Dec

KCBT Wheat

$7.335

$7.085

$6.983

$7.02

$0.04

0.50%

Dec

MGEX Wheat

$7.26

$7.12

$6.97

$6.99

$0.02

0.36%

Jan

Soybeans

$12.51

$12.96

$12.81

$13.20

$0.39

3.05%

Dec

Soybean Meal

$394.90

$422.30

$410.50

$427.80

$17.30

4.21%

Dec

Soybean Oil

$41.59

$40.24

$40.47

$41.16

$0.69

1.70%

Dec

Live Cattle

$132.08

$132.40

$133.40

$131.48

($1.93)

-1.44%

Jan

Feeder Cattle

$163.50

$164.43

$165.82

$163.50

($2.32)

-1.40%

Dec

Lean Hogs

$88.35

$88.13

$85.90

$85.63

($0.28)

-0.32%

Dec

Cotton

$76.58

$76.90

$77.12

$75.21

($1.91)

-2.48%

Dec

Oats

$3.30

$3.35

$3.43

$3.69

$0.26

7.58%

Nov

Rice

$15.20

$15.85

$15.77

$15.72

($0.05)

-0.32%

 

Cattle futures lost $1.93 for the week, or 1.44%. Feeders lost $2.32, or 1.40%. The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 showed managed money decreased their net long position in live cattle by 10,944 contracts bringing their total net long position to 84,086 contracts.  Weekly slaughter was up 4% from last week. Wholesale beef prices were down 1.96% on a Fri/Fri basis in the Choice, and down 1.11% in the Select.  Cash cattle trade began to develop at $131 in the south on Thursday, but was being passed in the north on Friday. On Friday afternoon, the USDA November 1 Cattle on Feed reports were released after the close.  October cattle on feed were reported 94.25% of a year ago, which was slightly higher than the average of the pre-report trade expectations.  Placements came in at 109.82% of a year ago, which was 1.12 points above the average trade guess.  Marketings were a little bit lower than expected, coming in at 101.03% of a year ago compared to the industry’s average guess of 101.4%.  The cold storage report showed frozen beef supplies declining from the previous month, but still 3% higher than last year. Our calculations show that ready numbers should be below year ago into December, based on the Cattle on Feed placement data. 

 

Hog futures were down 0.32% this week.  Pork production YTD is down 0.8% from year ago. Pork production this week was 0.4% larger than last week.  Estimated week to date slaughter (including Saturday estimates) came in at 2,345,000 head compared to 2,347,000 head for the same period last week.  The pork carcass cutout value was down $2.29/cwt this week, a 2.94% drop largely due to a 6.94% down-week for bellies.  The latest Commitment of Traders data for the reporting period between Nov 12 – Nov 19 showed managed money decreased their net long position in lean hogs by 10,936 contracts bringing their total net long position to 70,539 contracts.  The USDA Cold Storage report released after the close showed total frozen pork supplies were down 0.19% from the previous month, and were 6.09% lower compared to the same period last year.

 Market Watch

We will start the week reacting to any surprise futures positions resulting from December options expiration on the 22nd.  Livestock traders will also be reacting to the USDA Cattle on Feed and Cold Storage reports released Friday after the close. We will have the regular Monday USDA Export Inspections report. Weekly Export Sales will be delayed until Friday because everything is closed on Thursday for Thanksgiving in the US.  Friday will be a short trading day for livestock, with an early CME close. Friday will also be first notice day for December futures deliveries in the grains and financials.

 

 http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.                  Copyright 2013 Brugler Marketing & Management, LLC

Equities Sucking Out All The Money?

Nov 15, 2013

 Brugler

Market Watch with Alan Brugler

November 15, 2013

Equities Sucking Out All the Money?

 The US stock market hit new record highs this week, and several other markets around the world are on a roll as well. That has been a negative for the ag commodities, as new speculative money has been diverted to the equity sector. We need to remember that commodities as an investment asset class became popular starting back in 2004/05 because they were shown to be negatively correlated to the equities. If you were afraid stocks were about to go down, you were to put more money into commodities. Right now, investment money is not afraid of going into stocks since the Fed is still pumping up the money supply every month and inflation is still tame. The result has been a shortage of oxygen for the commodities bulls (the bears must have been issued scuba tanks!). 

December corn futures were up on Monday, but that was all she wrote. We didn’t even get an MACD buy signal on the weekly chart because the market was unable to hold the early week gain. The net change for the week was -1.1%. Demand is a bright spot, with weekly ethanol production rising to the highest level since February 2012. And ethanol stocks only 100,000 barrels above the lowest reading since reporting began in 2010. USDA reported strong weekly export sales of 1.203 MMT on Friday morning. Export commitments are already 66% of the newly revised USDA forecast for the year, hinting at another upward revision in the future. The EPA did announce a cut in the targeted 2014 ethanol volume of 13 billion gallons for corn ethanol on Friday, about as expected and subject to a 60 day comment period after posting in the Federal Register. This would imply corn consumption of 4.75 billion bushels before adding additional bushels for export and voluntarily blended ethanol.

Soybean futures were down 1.2% this week. Weekly US export sales were expected to be 700,000 MT – 1.3 MMT. USDA put the total for last week on the low end at 848,500 MT.   Total Commitments as a % of total exports are now at 86%, which compares to 73% for last year and the 5 year average of 62%.   NOPA member soybean crush in October was 157.06 mbu, which was a new all time high for October.   Oil stocks were estimated at 1.491 bln bu, with the actual figure coming in at 1.356 bln bu. and revealing strong soy oil use.  EPA announced a target of 1.28 billion gallons for biodiesel use in 2014 on Friday afternoon.

Wheat futures were lower in all three markets this week again this week. MPLS was off the most at 2.11%. USDA sees HRS stockpiles growing, due to a record Canadian crop competing with the US stocks. Total US export commitments are still a larger % of the USDA forecast than usual for this date, but USDA chose to leave the forecast UNCH at 1.1 billion bushels due to the slower pace of sales in recent weeks. The net for the week ending November 7 (announced on Friday) was only 288,700 MT.

Cotton futures were actually up 0.29% for the week despite a nasty sell off on Thursday. Global ending stocks are still projected to be record large at 95.71 million bales. Put another way, the world will have 87% of the 2014/15 consumption already in the warehouse on July 31 (assuming no growth from 2014 in that consumption). Chinese stocks are thought to be a whopping 160% of their annual use. USDA weekly Upland cotton export sales data reported for the week ending November 7 came in at 472,700 RB, along with 32,500 RB of Pima cotton. Total Commitments as a % of total exports (for upland cotton) are now at 35%, which compares to 38% for last year and lagging the 5 year average of 40%.    

Cattle futures picked up $1.00 for the week. Beef production YTD is down 1.1% from 2012. Production this week was 1.2% smaller than the same week in 2012.  Our calculations show that ready numbers should be below year ago into December, based on the Cattle on Feed placement data.  Weekly slaughter dropped to 599,000 head from 607,000 head last week and 627,000 head a year ago. Wholesale beef prices were down 0.8% on a Fri/Fri basis in the Choice, and down 0.7% in the Select. Cash cattle trade began to develop at $132 in the south on Friday, up $1 from the previous week. USDA is anticipating that 4Q13 beef production will be down 4.2% from last year.

Hog futures were down 2.52% this week.  Pork production YTD is down 1.2% from year ago. Pork production this week was 3% larger than last week, but only 0.8% larger than year ago. The slaughter run was larger than last week but was down 1.1% from year ago. Thus, you might conclude that average carcass weights were a little higher. USDA estimates them up 4 pounds vs. year ago but we are hearing a lot of 210 dressed numbers and USDA is using 209. The pork carcass cutout value was down $2.88/cwt this week, a 3.04% drop due mostly to a 7% slide in hams.

 Market Watch

We will start the week with the regular Monday USDA Export Inspections and Crop Progress reports. Weekly Export Sales will be out on Thursday. Thursday will also mark the expiration of the November feeder cattle contract. Friday will be active, with expiration of December grain options. It is also first notice day for December cotton futures deliveries. On Friday afternoon, USDA is scheduled to deliver the monthly Cattle on Feed report and the monthly Cold Storage report at 2 pm CST.

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.                  Copyright 2013 Brugler Marketing & Management, LLC

Cinderella and the Pumpkin

Nov 08, 2013

 Brugler

Market Watch with Alan Brugler

November 8, 2013

Cinderella and the Pumpkin

 

Reading all of the mainstream ag media marketing commentaries coming into the USDA reports, one would have concluded that Cinderella needed to get into that carriage right away or it was going to turn into a pumpkin with $3CORN on the license plate. Or maybe $10SOY? Some of the web headlines even alluded to Death Row. Private advisors and technical analysts such as ourselves were a little more guarded in our approach, because not everyone can be on the same side of the boat. When the sentiment is overwhelmingly bearish, the current price already reflects the expected news. If the news turns out to be not as bad as expected, you get rallies like the one seen in soybeans and soybean meal on Friday. Cinderella must have forgotten to set back her clock an hour. The Death Row inmates received a stay. 

December corn futures were down 0.12% this week, thanks to a 6 ¼ cent rally on Friday. They traded at the lowest level since August 2010 for the Dec 13 contract, hitting $4.15 ½ just ahead of the Friday USDA report. That seller was sure surprised! USDA showed nearly 2 million fewer harvested acres than in September, due to more complete FSA Prevented Planting numbers. With a yield of 160.4 bpa, the crop remained under 14 billion bushels at 13.989 billion. That is still a record larger crop despite very wet conditions in IA/MN last spring and some local drought issues. Low prices (USDA cut projected national average price 30 cents/bu on Friday) are curing low prices. USDA reported stronger than expected weekly export sales again on Thursday morning, and bumped up projected shipments for the year by 175 million bushels on Friday. Ending stocks are seen growing to 1.887 billion bushels. The Friday night CFTC report was finally up to current week data, and showed the spec funds reducing their net short position in corn by in fact taking on more long positions against expanding commercial hedge activity.

November soybean futures were up 40 cents per bushel this week, or more than 3%. Most of that gain came on Friday after USDA raised projected US ending stocks to a still snug 170 million bushels and cut projected world ending stocks for 2013/14. The huge 7% jump in soybean meal futures was backed up by larger projected meal exports, and contributed to the bean advance through product value. Weekly soybean export inspections for the previous week were again over 80 million bushels as the large forward sales book starts to head out of the ports.

Wheat futures were lower in all three markets this week again this week, with KC HRW the weakest class. Weekly export sales slowed a bit due to increased competition from Canada and the winding down of the Brazilian import program. Total commitments are still a larger % of the USDA forecast than usual for this date, but USDA chose to leave the forecast UNCH at 1.1 billion bushels due to the slower pace. A larger world ending stocks forecast also suggested more difficulty moving US wheat into the world market. WASDE ending stocks were a little larger than the average trade estimate on Friday morning, at 565 million bushels. They left the cash average price UNCH at $7.00 (midpoint).

Cotton futures had a bit of a dead cat bounce this week after falling about 10% in less than a month. Technical selling was a big part of the decline, along with traders anxious to get out of Dec futures ahead of December options expiration on Friday.  Global ending stocks are still projected to be record large, and USDA raised that forecast once again on Friday to 95.71 million bales. Put another way, the world will have 87% of the 2014/15 consumption already in the warehouse on July 31 (assuming no growth from 2014 in that consumption). USDA raised projected US average cotton yield to 808 pounds per acre from 796 million in September. The ending stocks forecast was bumped up to 3 million bales from 2.9 million, a smaller increase than some had feared.

 

  Commodity         Weekly Weekly
Month 10/18/13 10/25/13 11/01/13 11/08/13 Change % Change
Dec Corn $4.42 $4.40 $4.27 $4.27 ($0.00) -0.12%
Dec CBOT Wheat $7.06 $6.91 $6.68 $6.50 ($0.18) -2.70%
Dec KCBT Wheat $7.688 $7.590 $7.335 $7.085 ($0.25) -3.41%
Dec MGEX Wheat $7.60 $7.45 $7.26 $7.12 ($0.14) -1.90%
Nov Soybeans $12.91 $13.00 $12.66 $13.06 $0.40 3.16%
Dec Soybean Meal $410.10 $423.50 $394.90 $422.30 $27.40 6.94%
Dec Soybean Oil $41.68 $40.73 $41.59 $40.24 ($1.35) -3.25%
Dec Live Cattle $132.02 $132.97 $132.08 $132.40 $0.33 0.25%
Nov Feeder Cattle $166.85 $166.65 $163.50 $164.43 $0.93 0.57%
Dec Lean Hogs $87.95 $90.43 $88.35 $88.13 ($0.23) -0.25%
Dec Cotton $83.11 $78.91 $76.58 $76.90 $0.32 0.42%
Dec Oats $3.36 $3.33 $3.30 $3.35 $0.05 1.52%
Nov Rice $15.29 $15.54 $15.20 $15.85 $0.65 4.28%

 

Cattle futures picked up 25 cents for the week. Beef production YTD is down 1.1% from 2012. Production this week was 2.7% smaller than the same week in 2012.  Our calculations show that ready numbers should be below year ago into December, based on the Cattle on Feed placement data.  Weekly slaughter was only 607,000 head vs. 632,000 head a year ago. Wholesale beef prices were down 0.9% on a Fri/Fri basis in the Choice, and up 0.3% in the Select. USDA is anticipating that 4Q13 beef production will be down 4.2% from last year.

Hog futures were down 0.25% this week.  Pork production YTD is down 1.3% from year ago. Production this week was 1.5% smaller than the same week in 2012, but up 1.3% from the previous week as a few more hogs showed up (+0.8%). The slaughter run was down 2.8% from year ago. Thus, you might conclude that average carcass weights were a little higher. USDA estimates them up 2 pounds vs. year ago but we are hearing a lot of 210 dressed numbers and USDA is using 208. The pork carcass cutout value was up 80 cents for the week, due mostly to a 3.4% rise in the ham primal.

 Market Watch

We will get the regular Monday USDA Export Inspections and Crop Progress reports on Tuesday, due to the federal holiday on Monday. US futures markets will be open and trading, however. Weekly Export Sales will be out on Friday, again due to the Veterans Day holiday.  December cotton options expired on Friday, leaving a few people with surprise futures positions to deal with on Monday. The monthly NOPA crush report is scheduled for Thursday morning. Thursday is also the last trading day for November canola, rice and soybean futures.  Friday will mark the expiration of most November equity market options.  

 Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.  

Copyright 2013 Brugler Marketing & Management, LLC

Red Week

Nov 01, 2013

 Brugler

Market Watch with Alan Brugler

November 1, 2013

Red Week

The thing that jumps out at you from our weekly change report is the color. Net changes that are red mean prices dropped this week. The only commodity on our list that didn’t drop was soy oil, which benefitted from rising palm oil prices and the tightest US inventory in years. Everything else posted losses for the week. The ag commodities were not the exception, as crude oil and gold also had big losses. Why all the selling in a week when the Fed decided to keep spiking the punch bowl? The two most obvious candidates are the rising stock market (drawing new money away from commodities) and the strong US dollar. A stronger dollar makes commodities more expensive for buyers in third party currency terms. Looked at another way, it takes fewer "strong" dollars to buy the same amount of value in a commodity, i.e. a lower price.

 

 

Commodity

 

 

 

 

Weekly

Weekly

Month

10/11/13

10/18/13

10/25/13

11/01/13

Change

% Change

Dec

Corn

$4.33

$4.42

$4.40

$4.27

($0.13)

-2.90%

Dec

CBOT Wheat

$6.92

$7.06

$6.91

$6.68

($0.23)

-3.33%

Dec

KCBT Wheat

$7.603

$7.688

$7.590

$7.335

($0.26)

-3.36%

Dec

MGEX Wheat

$7.55

$7.60

$7.45

$7.26

($0.20)

-2.62%

Nov

Soybeans

$12.67

$12.91

$13.00

$12.66

($0.34)

-2.62%

Dec

Soybean Meal

$403.40

$410.10

$423.50

$394.90

($28.60)

-6.75%

Dec

Soybean Oil

$40.28

$41.68

$40.73

$41.59

$0.86

2.11%

Dec

Live Cattle

$132.47

$132.02

$132.97

$132.08

($0.90)

-0.67%

Nov

Feeder Cattle

$169.27

$166.85

$166.65

$163.50

($3.15)

-1.89%

Dec

Lean Hogs

$86.50

$87.95

$90.43

$88.35

($2.07)

-2.29%

Dec

Cotton

$83.37

$83.11

$78.91

$76.58

($2.33)

-2.95%

Dec

Oats

$3.17

$3.36

$3.33

$3.30

($0.04)

-1.13%

Nov

Rice

$15.12

$15.29

$15.54

$15.20

($0.35)

-2.22%

 

December corn futures were down 2.9% this week. They traded at the lowest level since August 2010 for that Dec 13 contract. USDA reported a huge 3 week accumulation of US corn export sales, 5.29 MMT (208 million bushels). That didn’t stop prices from dropping on a litany of rising yield estimates. On Friday, Informa and FCS both boosted projected national average corn yield to 161.2 bpa, with production estimates of 14.01 and 14.36 billion bushels respectively based on different harvested acreage assumptions.

November soybean futures were down 2.6% this past week, and are now trading at about the same price they were on October 11. There were plenty of bullish inputs, but no bullish price action. Weekly export inspections for the previous week were near record large at more than 83 million bushels. Weekly Export Sales announced on Thursday, while actually a 3 week accumulation, totaled 4.742 MMT (174 million bushels). The US has now booked more than 80% of the expected sales for the entire year in less than two months.

Wheat futures were lower in all three markets this week, with MPLS slightly stronger than the other two on ideas that millers are upping the % of spring wheat in their flour blends. Cumulative export shipments are now over 572 million bushels. Last year they were only at 393 million bushels. The US ag attaché cut projected Argentine wheat production to 10.5 MMT compared to the official September estimate of 12 MMT.

Cotton futures sank another 2.95% this week after losing more than 5% the prior week. Technical selling was a big part of the decline. Global ending stocks are still projected to be record large. US harvest pace is lagging behind the 5 year average, but the big story is slower export sales. Upland sales commitments are only 49% of the USDA projection for the year. They would typically be 56% by now.

Cattle futures gave back $.90 for the week after rising $2.70 the week before on strong cash cattle trade of $133. Producers were having trouble getting that on Friday, with a few trades at $132. Beef production YTD is down 1.0% from 2012. Production this week was 2.3% smaller than the same week in 2012.  Our calculations show that ready numbers should be below year ago into December, based on the Cattle on Feed placement data.  Weekly slaughter was 624,000 head vs. 645,000 head a year ago. The USDA Cattle on Feed report confirmed that numbers are still down more than 7% from last year. However, the Cold Storage report showed total beef stocks up 3% from August, and up 5% from year ago. Wholesale beef prices were up 1.8% on a Fri/Fri basis in the Choice, and up 2.6%% in the Select.

Hog futures were down 2.3% this week.  Pork production YTD is down 1.3% from year ago. Production this week was 2.4% smaller than the same week in 2012, but up 1% from the previous week. The slaughter run was down 3.7% from year ago. Thus, you might conclude that average carcass weights were a little higher. USDA estimates them up 3 pounds vs. year ago. The pork carcass cutout value was down 33 cents for the week, due mostly to a 2.7% seasonal decline in the pork belly primal.

Market Watch

We’ll get the rest of the back data cleaned up this week, with USDA releasing the first Crop Production and Supply/Demand reports in two months on Friday morning. CFTC is also scheduled to be caught up with their Commitment of Traders data by November 8 (pm). In the mean time, we will get the regular Monday USDA Export Inspections and Crop Progress reports. Weekly Export Sales will be out on Thursday morning, and that series is now back to its typical 1 week lag.  December cotton options expire on Friday. November cattle options expired on the 1st and that will leave a couple folks with surprise positions to deal with on Monday morning.

 

Visit our Brugler web site at http://www.bruglermarketing.com, find our iPad app "AgMarket" in the app store, or call 402-697-3623 for more information on our consulting and advisory services for farm family enterprises and agribusinesses.

 

There is a risk of loss in futures and options trading.  Such trading is not appropriate for all individuals. Past performance is not necessarily indicative of future results.  Comments made in this article are in no way to be seen as an endorsement of futures and options trading. Reproduction or rebroadcast of any portion of this article without written consent of Brugler Marketing & Management LLC is strictly prohibited.  

Copyright 2013 Brugler Marketing & Management, LLC

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